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his is hands down the best entrepreneurship book I've read this year. Below are my notes on Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel and Blake Masters. Yes, I realize I've taken notes on a book based on the notes that someone else took: Blake was a student in Thiel's Stanford CS183 class and took such extensive and helpful class notes that his site and notes got a lot of attention on the web. It is the lessons from that class that form the basis of this book. I really enjoyed Thiel's "Competition is for Losers" article in the WSJ, which was effectively chapter 3 of his book. It provides a great taste of Peter's contrarian and thought-provoking ideas. I can easily see Peter giving a TED talk about the concepts in this book as they are so different from the conventional wisdom I hear repeated everywhere and really makes me question a lot of assumptions about what a good business really is. Also, as a magician, I especially loved the sections about searching out secrets (of the universe and of people) because those are the things that are the seeds of valuable opportunities. *Preface *Every moment in business happens once *Copying easier than creating *Goes from 1 to n *Creating is 0 to 1 *Thinking about business from first principles instead of formulas *All new invention processes unique *1 the challenge of the future *Interview question: what important truth do very few ppl agree with you on? *Most people believe in x but the truth is the opposite of x *Good ways of looking into a future different from but rooted in today *1 to n horizontal progress is globalization *0 to 1 vertical progress is technology *2 party like it's 1999 *Identify a delusional popular myth *Will lead to contrarian truth *Lessons learned from 90s bubble *Small incremental steps not one big grandiose goal *Stay lean and unplanned and treat entrepreneurship as agnostic experimentation *Improve on the competition *Don't try to create a new MarkEt; find an existing customer for an existing product to improve on *Focus on profit not sales *Technology is about product development not distribution *Only viral growth *But likely the opposites of these lessons is the contrarian truth *How much of current business thinking shaped by reactions to past? *Contrarian is not opposing the crowd but thinking for yourself *3 all happy companies are different *What valuable company is nobody building? *Creating value without a valuable company *Big businesses can be bad businesses *Google creates less value but captures more *Monopoly vs perfect competition *So good at what it does that no other company can compete *Capitalism and competition are opposites *Don't build a commodity business *Both types tell lies to hide true state *Don't focus on trivial differentiating factor *Ruthless fight for profits in competition *Money is either an important thing or everything *Monopoly allows business to think of other issues *Monopolies drive progress because gives big incentive to innovate and invest in research *4 the ideology of competition *School competition for conformity *Cutthroat culture of school *War metaphors in school and business *Competition is what is like war *Combatants more similar to each other than different *Google and Microsoft rivalry allowed apple to swoop in and win *Is the war one worth fighting about *When rivalry too intense, might be better to merge *5 last mover advantage *Can't just focus on near term growth *Right Question is will this business be around a decade from now *Characteristics of monopoly *Proprietary technology *Must be 10X better than closest substitute on some important dimension *Best way is to invent something new *Superior integrated design *Network effects *Must initially start with small market to saturate it *Economies of scale *Harder for service businesses *Branding *Start with small market and monopolize *Small group of ppl close together served by little or no competition *First dominate specific niche then scale to adjacent markets *Don't disrupt existing market *Avoid competition where possible *Invent new unserved market *Be the last mover to get advantage and enjoy sustainable profits for long term not first experimenter *Study the end game first *6 u r not a lottery ticket *Make your own luck by working hard *Believe in cause and effect not luck *Expect a definite future which you can shape not a hazy indefinite uncertain one *Favor firm convictions not many sided mediocrity and well rounded ness *Just determine one best thing to do and do it *4 views *Indefinite pessimist (europe) *Definite pessimism (china) *Definite optimism (led western world; 19th century business classes); bold plans for future *Indefinite optimism (dominated in last 30 years); rearranging existing products; finance growth; consultants squeezing out efficiencies; keeping options open *Indefinite optimism future incentivizes financiers bankers and lawyers *No one knows what to do with actual money nowadays *Indefinite politics: real time tailoring of electoral image to what ppl want now instead of in 10 years *Indefinite logic of entitlement spending *Indefinite philosophy: little concrete ideas; arguing over process to defer making definite plans for future *Indefinite life; previously scientists searched to cure death; now death just probability tables; accepted idea that death inevitable and random; biotech following inverse of moore's law and struggling in its random search *Prioritize design over chance *Changing the world through careful planning, not listening to focus group feedback *Lean startup is a methodology not the goal *7 follow the money *Power of compound interest and exponential growth *Pareto principal: 80/20 *20% get 80% of something *We don't live in a normal world; we live under a power law *Vc is not about diversification across many companies; it's about dogged pursuit of only the best who will dominate *8 secrets *What secrets does the world still have yet to give up *Need to believe in secrets to work extremely hard to find them *Secrets of nature and secrets about people *What secrets is nature not telling you? *What secrets are people not telling you? *What are ppl not allowed to talk about? What is taboo? *9 foundations *Decisions made early on impact everything and extremely hard to change *Ownership possession and control *Board of 3 *Everyone involved should be full time and on site *Company does better the less it should pay the CEO *CEO should take the lowest salary in the company *Cash always more about present than future *Equity orients ppl right *Equal shares wrong *10 the mechanics of mafia *Hire ppl who really enjoy working together *Never outsource recruiting *Why someone should join should always be specific to your company: mission and team *Why ur unique *Have early staff be similar to each other so share mission and goals *Need early hires to all be obsessed with same things *Do one thing *Every employee responsible and evaluated on just one thing specific to them *See your work either as a cult or as a consultant *11 if u build it will they come *Sales is about persuasion and is hard to make it look easy *Just as important as engineering *Sales works best when hidden *Like actor or magician *Distribution as fundamental part of design of product *Customer lifetime value must exceed customer acquisition cost *TV ads work and are like megaphone *Viral marketing *Power law of distribution channels *Selling to non customers: must also sell to employees and investors and media; need pr strategy *12 men and machine *Computers empower ppl not replace them (average is over!) *Tools not rivals *Technology way to escape competition *13 seeing green *7 questions every business Must answer *The engineering question: can you build it *The timing question: is now the right time to build it *The monopoly question: are you starting with a big share of a small market *People: do you have the right team *Distribution: do you have the right way to deliver the product *Durability: will market position be defensible 10-20 years into the future *Secret: have u identified a unique opportunity others don't see *Clean tech failed to have answers to all of theses questions *14 the founders paradox *Extremism of founder traits *Insider outsider *Conclusion: stagnation or singularity *Think for yourself